White House may cave on health care public option

WASHINGTON -- It is more important that health-care legislation inject stiff competition among insurance plans than it is for Congress to create a pure government-run option, White House Chief of Staff Rahm Emanuel said Monday.

"The goal is to have a means and a mechanism to keep the private insurers honest," he said in an interview. "The goal is non-negotiable; the path is" negotiable.

His comments came as the Senate Finance Committee pushed for a bipartisan deal. To help pay for the package, the committee planned to announce an agreement Wednesday with hospitals and the White House for $155 billion over a decade in reductions to Medicare and charity-care payments for hospitals, according to a person familiar with the agreement. That will help pay for the legislation, expected to cost at least $1 trillion over 10 years.

One of the most contentious issues is whether to create a public health-insurance plan to compete with private companies.

Mr. Emanuel said one of several ways to meet President Barack Obama's goals is a mechanism under which a public plan is introduced only if the marketplace fails to provide sufficient competition on its own. He noted that congressional Republicans crafted a similar trigger mechanism when they created a prescription-drug benefit for Medicare in 2003. In that case, private competition has been judged sufficient and the public option has never gone into effect.

Mr. Obama has pushed hard for a vigorous public option. But he has also said he won't draw a "line in the sand" over this point.

The deal with the hospitals follows a similar agreement with brand-name drug companies. And insurance companies were talking to Senate negotiators about cuts worth at least $100 billion over 10 years, according to two officials with knowledge of the negotiations.

Congressional negotiators and the White House hope to lock in support from the industry groups, which are backing a health bill in general terms but have opposed past efforts.

Hospitals and insurers hope to gain some degree of control over cuts to their federal payments. In principle, a health-care overhaul could benefit both groups by raising the number of Americans who buy and have health insurance.

"They've made an assessment reform is going to happen, so it's better to be part of that than not," Mr. Emanuel said.

However, insurers, and most Republicans, strongly oppose creation of a government-run insurance option, saying it would ultimately drive them out of business. Most Democrats support a public option.

The president and his aides already have signaled a willingness to consider an alternative to a public plan under which a network of nonprofit cooperatives would compete with for-profit insurance companies. That is the leading idea in the Senate Finance Committee.

The Senate Health, Education, Labor and Pensions Committee, meanwhile, has put forward its own version of a government-run plan, closer to what most liberals and the White House favor.

On Monday, Mr. Emanuel said the trigger mechanism would also accomplish the White House's goals. Under this scenario, a public plan would kick in under certain circumstances when competition was judged to be lacking. Exactly what circumstances would trigger the option would have to be worked out.

Some Democrats pushing for a vigorous public plan say the trigger idea isn't good enough. Sen. Charles Schumer (D., N.Y.) said in an interview, "If it's not there on day one, those of us who support a public option have a real problem with it."

That's not caving. That's setting priorities, and they are right to be doing so. If private insurance companies are made honest and they drive the costs down and they manage to insure more people at affordable prices, then that's a huge victory for both Obama and the American people.

Unless Obama draws a line in the sand and says 'a public option is non-negotiable,' then it leaves open the possibility that he and the Dems may cave.

Bottom line, the majority of the country wants a public option. If Obama and the Dems cave the Dems will lose the majority they have in Congress in the mid-terms. And Obama's a one-term president, if a decent GOP or Independent candidate comes along for 2012.